Here's my take on the allocation process. EGRP threatens to put you in IPO jail for flipping, reason being that by flipping, you add to volatility and would in the future reduce their (EGRP's) chances of getting allocations. However, they also open IPOs to everyone after answering a simple questionaire - which, by the way, is not hard to figure out which answers they are looking for. Basically, the amount of eligible IPOers are plenty. Therefore, your odds of getting an IPO is greatly reduced, meaning that you are lucky to get one on every 35-50 tries. Given the average length between IPOs, I guess you are lucky to get 1-2 per 6 months.
Since IPO jail does not seem to be permanent, then you have no reason to NOT flip. By the time you get out of IPO jail, probability means you may get another one. Just in time. So the best deal is to flip, regardless of IPO jail. For most people, getting 100 shares at $12-15 and watching the stock double or more is just too tempting to pass up. If you don't flip and wait 30 days, you run the risk of getting ZERO returns and wasting your 1-2 IPO shots per 6 months.
Now what if they imposed a $100K floor or something for IPO eligibility? You can then reduce the number of people who have minimal account deposits who are in it strictly for IPOs (like I am doing). Wonder what this would do to their IPO appeal to the common investor? |
